Both the construction and real estate sectors in Nigeria are thriving, according to the National Bureau of Statistics‘ (NBS) third quarter 2022 gross domestic product (GDP) report. Per the report, both sectors together contributed N20 trillion to the GDP in the first three quarters of 2022, specifying that while construction services earned N12.9 trillion, real estate contributed N7 trillion to the GDP.
More particularly, the report shows that real estate services rose by 9.13%, which is 0.50% higher than the growth rate reported for the same period in 2021, though lower by 3.68% compared to the preceding quarter.
These figures show that the Nigerian real estate market is poised for significant growth in the coming years, and by extension, off-plan real estate investments are emerging as a lucrative avenue for investors.
In this article, we explore the future prospects and trends for off-plan real estate in Nigeria, considering factors such as population growth, urbanization, and infrastructure development. We also discuss how both old and new real estate investors can navigate potential risks and uncertainties in the sector.
Population Growth and Housing Demand
Nigeria’s population is projected to continue growing rapidly—up to 223.8 million in 2023. This population growth creates a strong demand for housing facilities. As urbanization spreads, more people migrate to major cities in search of better living conditions and opportunities.
This demographic shift presents a significant opportunity for off-plan real estate investments. As an investor, you can capitalize on the growing demand for affordable, quality housing by targeting areas with high population density and limited housing supply.
Urbanization and Investment Potential
The ongoing urbanization trend in Nigeria is transforming its cities into economic hubs, attracting both domestic and foreign investments. As urban areas expand, the demand for commercial and residential spaces is expected to rise.
Investing in off-plan real estate assets in strategic locations within these urban centers can offer you substantial returns. Therefore, you should focus on areas experiencing rapid urban development, such as Lagos, Abuja, Port Harcourt, and other emerging centers where demand for housing and commercial properties is consistently high or steadily growing.
Infrastructure Development and Market Expansion
Infrastructure development plays a crucial role in the growth of the real estate sector. The Nigerian government has been making efforts to improve infrastructure, including roads, power supplies, and transportation systems. These developments not only enhance the overall quality of life but also increase the value and attractiveness of off-plan real estate properties. So, as a prospective or veteran investor, you should closely monitor infrastructure projects and target areas that are expected to benefit from upcoming improvements.
Mitigating Risks and Uncertainties
While the future prospects for off-plan real estate investments in Nigeria look promising and rewarding, you should also be mindful of the potential risks and uncertainties that come with the business.
Market volatility, regulatory changes, and construction delays are some challenges that may arise when interacting with the market. To mitigate these risks, you’ll need to do your homework, research reputable developers, and carefully review the contractual terms. Also, diversifying investment portfolios and seeking professional advice can help you manage the risks and uncertainties that abound in business.
In conclusion, it’s essential to approach investments with caution, understand the risks involved, and implement sound risk management strategies. By staying informed, leveraging market trends, and adapting to changing dynamics, both old and new real estate investors can position themselves to reap the rewards of Nigeria’s evolving real estate market with fewer hassles and complications.